The home-buying process is stressful, no doubt about it. Finding the perfect property, moving from your current residence and securing a loan can be tough to juggle.
Once you’ve decided to jump into the market, give yourself a leg up — and minimize the last-minute scramble — by taking some time to gather the following documents ahead of time.
The exact documents necessary for your home loan will vary depending on several factors, including your lender, loan amount and income.
Documents you need when buying your home may include:
1. Pay stubs:
Lenders need to know you have stable income that will allow you to pay your mortgage each month. Bank on showing at least 30 days of income via pay stubs. If you don’t have paper copies, contact your workplace HR representative for digital stubs. Use our calculator to see how much mortgage you can afford.
2. Proof of employment:
You may not need it, but a letter from your current employer with your hire date and employment status could be necessary to sway things in your favor.
3. Employer contact information:
Again, steady income is the name of the game when it comes to securing a loan. Compile a contact list documenting your last two years of employment. Include all company names and address, along with names and contact information for your former bosses or HR representatives.
4. Tax documents:
Be prepared to submit at least two years of tax returns and W2s, which will further support your income history. (If you haven’t already, be sure to sign your tax documents.) A long-term history shows your ability to pay your mortgage over the life of the loan — often 30 years. If your income has changed drastically year over year, your lender may require further explanation or documentation. Get some advice on how to organize important documents.
5. Bank statements:
Lenders want a snapshot of the money coming and going from your bank account. In most cases, 30 to 60 days of transactions will suffice.
6. Business documents: If you’re self-employed, work as a contactor or otherwise operate a business, your lender will want to see tax returns (again, signed), along with year-to-date profit and loss statements.
7. Debt information:
Your qualification to receive a mortgage loan comes down to, in part, your debt-to-income ratio. Your pay stubs and tax documents show your income. Next you’ll need to show any outstanding loans you have, including car payments, student loans, additional mortgages or credit card debt. Gather up-to-date statements that show your remaining balance. Go a step further and compile creditor names and addresses, account numbers, monthly payment amounts and outstanding balances on each account.
8. Confirmation of property:
If you own another property or have owned one in the past, be ready to provide proof of ownership or sale.
9. Residential history:
Show your history with home address(es) for the last two years, along with landlords’ names and contact information if applicable.
10. Proof of additional income:
If you receive Social Security or disability payments, pension income, dividends or bonuses, you’ll need to show it. Potential homebuyers aren’t required to disclose child support and alimony payments; discuss whether or not it’s appropriate with your loan officer.
11. Stocks, bonds and savings statements:
Your total assets will count toward your ability to purchase a home. Provide statements showing the value of your CDs, IRAs, stocks, bonds or other securities, including any money you’ll use toward a down payment.
12. Earnest money source:
After you make an offer on a property and provide earnest money — a deposit held in escrow that shows your commitment to purchase — you’ll need to prove the source of that money. If it came from your savings account, a PDF of your bank account history will do the trick. If you received the money as a gift from a family member or another way, you may need to provide a letter confirming the source.
Buying a home is tough, but being organized will go a long way to ease the burden. Once your loan is secured, get ready for the big move with our moving checklist. Paperwork is a big part of the home buying process, and so is ensuring your new home is protected. Connect with a Farm Bureau agent to learn more about protecting your new home with homeowners insurance.